Apple in China
Issie Lapowsky (Amazon, Reddit, John Gruber):
But Cook was in Beijing that day to do the opposite: to impress upon President Xi Jinping’s government that Apple was so committed to China that it planned to spend $275 billion in the country over the next five years. “I call it a Marshall Plan for China, because I could not find any corporate spending coming close to what Apple was spending,” said Financial Times journalist Patrick McGee, who writes about this and other moments illustrating Apple’s role in enabling China’s rise in his new book Apple in China: The Capture of the World’s Greatest Company.
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Through interviews with more than 200 sources, more than 90% of whom worked for the tech giant at some point, the book traces the history of the company to flip the usual narrative about Apple and China on its head. By expending such exorbitant resources in China and training so many Chinese workers with its novel, hands-on approach to micromanaging foreign factories, Apple facilitated “an epic transfer of knowledge” to China, McGee told Vanity Fair.
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Apple doesn’t just hope that suppliers come up with better, lighter, stronger components and then incorporate them into the next iPhone. It is intimately working in hundreds of factories across China, making those innovations happen, and that’s how the iPhone stays ahead of everybody else.
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My favorite part of the book is about the “yellow cows,” [a slang term to describe organized scalpers] that effectively built a gig economy and distributed iPhones at marked-up prices around the country. The yellow cows found ways to make more money per iPhone than Apple.
The author, Patrick McGee, was recently on The Daily Show, The Talk Show, The AmberMac Show, and CNBC. After listening some of the interviews, this seems like the most interesting Apple book in a long time, with tons of details and anecdotes. I look forward to reading it.
Not only does it hit that crucially important overlay of the story, it provides some fascinating, and at times frightening detail in many of the design, engineering, corporate, and political maneuverings far beneath the surface of all the machinations we read about on our iPhones.
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If there is one big surprise that I think pierces the Apple aura, it’s just how little central control and understanding of what was happening on the ground in China in the helter-skelter days of early iPhone growth. What on the surface may have seemed like, and been adopted almost as mantra-like by the tech press, a giant corporation with a vision pushing buttons in Monday morning executive meetings, often feels like a company reacting to forces beyond its control that it brought into the tent.
Apple in China by @patrickmcgee.bsky.social probably the most interesting book I have read about Apple in the 25 years that I have been writing about the company. Beyond the geopolitical issues, it’s really interesting to learn all the details about how their products are built.
Previously:
- Apple Removes Messaging Apps From Chinese App Store
- Apple’s Problem With Lina Khan
- iPhone Parts Pairing
- The Problem With China and AI
- Tim Cook’s Secret $275 Billion Deal With China
- A Hard Bargain for Apple in China
Update (2025-06-12): Ben Thompson:
An Interview with “Apple in China” Author Patrick McGee about Apple’s reluctant shift to outsourcing and how its position relative to its supply chain has shifted over time.
Update (2025-06-16): Jim Nielsen:
There’s this part in there where he’s talking about a guy who worked for Apple and was known for being ruthless, stopping at nothing to negotiate the best deal for Apple. He was so aggressive yet convincing that suppliers often found themselves faced with regret, wondering how they got talked into a deal that in hindsight was not in their best interest.
One particular Apple executive sourced in the book noted how there are companies who don’t employ questionable tactics to gain an edge, but most of them don’t exist anymore.
LG originally produced the iMac G3. But once Foxconn got involved - in order to win Apple’s business - they designed a system to mold iMac G3 cases on demand per order so there was never any overstock on a specific color. 🤯
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“Jony Ive designs something Apple has no idea how to mass produce” seems to be a recurring theme and a big reason why Apple is so dependent on Foxconn. Apparently the iMac G3s that Steve demoed for the announcement were hand produced by the ID team because there was no other way to produce them.
Another theme is that Steve Jobs was generally against Foxconn and outsourcing, while Tim Cook was for it. But without the cash on hand to expand US manufacturing eventually Cook won out.
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[The] CRT iMac was supposed to continue alongside the iMac G4. Jobs killed the revised CRT iMac project. A footnote says that when iMac G4 production went badly Apple rolled back out the scuttled iMac CRT update as the eMac to fill the gap.
Update (2025-07-07): Jeff Johnson:
Available only on Kindle, this publication has the same title and subtitle as the famous book except for the last word: “Technology” in place of “Company”. The author is a self-described aspiring cybersecurity specialist, which I take to mean not a cybersecurity specialist, with nom de plume CyberWave Shamsan, who by the way has no other publications on Amazon.
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Whatever services that Amazon provides to customers in its store, policing scams appears not to be one of those services.
Update (2025-08-01): Jeff Johnson:
Tim Cook, whom Jobs recruited to join Apple in 1998, received a momentous phone call in 1999 from Terry Gou, the founder of a Taiwanese contract electronics manufacturer variously known as Hon Hai Precision Industry Co., Ltd., Hon Hai Technology Group, or Foxconn. Gou and Cook came to know each other personally during Cook’s short tenure at Compaq, which was Foxconn’s biggest client, and Foxconn had already worked as a minor supplier for Apple. Gou got wind of LG’s manufacturing difficulties with Apple. Sensing an opportunity, Gou directed Foxconn to reverse engineer Apple’s LG-assembled iMac. What he told Cook over the phone was, “I can fix this.”
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Originally, Foxconn followed Apple’s traditional three continent strategy, opening a factory in the Czech Republic to supplement iMac production from Shenzhen, China, as well as a smaller factory in southern California to manufacturer lower volume Power Macs. However, Apple eventually consolidated manufacturing in China.
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If there’s a weak part of the book, it’s that McGee doesn’t fully connect the dots of the technology transfer from Apple to China. That’s because Apple in China is focused almost exclusively on Apple. There are no interviews with employees of Huawei or Xiaomi, for example. McGee’s evidence, replete with first-hand accounts of what happened over the years inside Apple’s Chinese factories, is extensive and powerful, yet circumstantial. To be clear, I don’t dispute McGee’s conclusion, but neither do I think the argument is an open and shut case.
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Ironically, the Divorce Avoidance Program itself had to be abandoned, or at least transmogrified, due to Apple’s continuing inhumane demands on employees. Instead, those sent overseas were offered cash bonuses, called “Dan bucks” after Apple hardware executive Dan Riccio, in order to placate upset spouses.
Update (2025-08-19): Nick Heer:
Cook’s White House announcement, for all its patriotic fervour, only underscores this dependency. In the book’s introduction, McGee reports “Apple’s investments in China reached $55 billion per year by 2015, an astronomical figure that doesn’t include the costs of components in Apple hardware” (page 7). That sum built out a complete, nimble, and precise supply chain at vast scale. By contrast, Apple says it is contributing a total of $600 billion over four years, or $150 billion per year.
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McGee writes of grey market iPhone sales — a side effect of which was the implementation of parts pairing and activation — and the early frenzy over the iPad. Most notably, McGee spends a couple of chapters — particularly “5 Alarm Fire” — dissecting the sub-par launch sales of the iPhone XR as revealed through executive emails and depositions after Apple was sued for allegedly misleading shareholders. The case was settled last year for $490 million without Apple admitting wrongdoing. Despite some of these documents becoming public in 2022, it seems nobody before McGee took the time to read through them. I am glad he did because it is revealing. Even pointing to the existence of these documents offers a fascinating glimpse of what Apple does when a product is selling poorly.
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I have long assumed Apple’s willingness to comply with the demands of the Chinese government are due to its supply chain and manufacturing role. That is certainly true, but I also imagine the country’s sizeable purchasing power is playing an increasing role. That is, even if Apple decentralizes its supply chain — unlikely, if McGee’s sources are to be believed — it is perhaps too large and too alluring a market for Apple to ignore. Then again, it arguably created this problem itself. Its investments in China have been so large and, McGee argues, so impactful they can be considered in the same context as the U.S.’ post-World War II European recovery efforts. Also, the design of Apple’s ecosystem is such that it can be so deferential. If the Chinese government does not want people in its country using an app, the centralized App Store means it can be yanked away.
Previously:
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Besides the numerous exclusive anecdotes I’m really enjoying the author anchoring design/manufacturing/hiring decisions around the reality of Apple’s finances; which is the coarse part I royally ignored when naively getting enamored with Apple’s product design. (I’m a third in, just past the chapter introducing The Blevinator.)
